| How much house can I buy? |
How much house can you buy? That depends. There are many different loans available today--fixed rate loans, adjustable-rate loans, and balloon loans. There are conventional loans, government loans--and special programs for first-time buyers.
Most lenders will allow you to borrow up to 28% of your gross income for your house payment, but not more than 36% for all long-term obligations. This includes credit cards, bank loans, car payments, student loans, and alimony and child support. It does not include life insurance, utility bills, payroll deductions for taxes and social security or contributions to a retirement program.
To figure your maximum house payment, multiply your gross income by 36%. Then subtract all required payments. Next multiply your gross income by 28%. The lower of these two numbers is your maximum house payment.
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